Bank of England Cuts Base Rate to 4.5% – What Does This Mean for Your Business?

In a widely anticipated move, the Bank of England has reduced its base interest rate to 4.5%, marking a potential turning point for the UK economy. With the decision made by a 7-2 majority, many are now asking: Could this signal further cuts throughout 2025?

At SJC Chester, we understand that changes in interest rates, inflation, and economic policy directly impact businesses and individuals. Here’s what you need to know about the latest base rate cut and how it could affect your financial landscape.

Inflation & Interest Rates: What’s Next?

The latest Consumer Price Index (CPI) figures for January 2025 revealed an unexpected jump in inflation to 3.0%, up from 2.5% in the last quarter of 2024. Rising transport, food, and energy costs have contributed to this increase, prompting concerns about whether inflation will continue to climb.

Despite this, the Bank of England maintains a long-term view that inflationary pressures will ease over 2025, expecting inflation to return to 2% by the end of the year. However, with global energy costs and trade policy shifts adding uncertainty, businesses and homeowners should stay prepared for potential market fluctuations.

Economic Growth & Business Outlook

The UK economy is forecasted to see a modest recovery in GDP growth from mid-2025. However, concerns remain over the country’s capacity to produce goods and services, which has been growing more slowly than expected.

For businesses, this means:

✔ Interest rate reductions could ease borrowing costs

✔ Potential inflation spikes may affect supply chains

✔ Economic uncertainty remains a key factor in financial planning

At SJC Chester, we help businesses navigate economic changes with expert accounting, tax, and financial advice. Whether you're looking to invest, expand, or restructure, our team is here to ensure your financial strategy remains resilient and future-proof.

Will Interest Rates Fall Further?

Looking ahead, the Bank of England has signalled a cautious approach, stating that any further interest rate cuts will be gradual and carefully assessed. Economic factors such as global trade tensions, inflation trends, and market volatility will determine how monetary policy evolves over the next year.

For businesses and individuals, staying ahead of these changes is key. SJC Chester provides proactive financial insights and support, ensuring our clients are well-prepared for shifting economic conditions.